Murdoch Aides Long Tried to Blunt Scandal Over Hacking

LONDON — Two days before it emerged that The News of the World had hacked the cellphone of a murdered schoolgirl, igniting a scandal that has shaken the media empire of Rupert Murdoch, his son James told friends that he thought the worst of the troubles were behind him. And he was confident that the News Corporation’s $12 billion bid for the satellite company British Sky Broadcasting would go through, according to a person present.

Now, with their most trusted lieutenant, Rebekah Brooks, arrested on suspicion of phone hacking and paying the police for information, the broadcasting bid abandoned, the 168-year-old News of the World shuttered, and nine others arrested, Rupert and James Murdoch are scheduled to face an enraged British Parliament on Tuesday.

It is a spectacle that Rupert Murdoch’s closest associates spent years trying to avoid.

Interviews with dozens of people involved in the hacking scandal, including current and former News Corporation employees, provide an inside view of how a small group of executives pursued strategies for years that had the effect of obscuring the extent of wrongdoing in the newsroom of The News of the World, Britain’s best-selling tabloid. And once the hacking scandal escalated, they scrambled in vain to quarantine the damage.

Evidence indicating that The News of the World paid the police for information was not handed over to the authorities for four years. Its parent company paid hefty sums to those who threatened legal action, on condition of silence. The tabloid continued to pay reporters and editors whose knowledge could prove embarrassing even after they were fired or arrested for hacking. A key editor’s computer equipment was destroyed, and e-mail evidence was lost. Internal advice to accept responsibility was ignored, former executives said.

John Whittingdale, a Conservative member of Parliament who is the chairman of the committee that will question the Murdochs, said they need to come clean on the depth of the misdeeds, who authorized them and who knew what, when.

“Parliament was misled,” Mr. Whittingdale said. “It will be a lengthy and detailed discussion.”

Mr. Murdoch has indicated he wants to cooperate.

“We think it’s important to absolutely establish our integrity in the eyes of the public,” he said last week. “It’s best just to be as transparent as possible.”

Ms. Brooks’s representative, David Wilson, said she maintained her innocence and looked forward to clearing her name, but declined to answer specific questions.

As a trickle of revelations has become a torrent, the company switched from containment to crisis mode. Ms. Brooks and others first made the case that other newspapers had also hacked phones, and they sought to dig up evidence to prove it, interviews show.

At a private meeting, Rupert Murdoch warned Paul Dacre, the editor of the rival Daily Mail newspaper and one of the most powerful men on Fleet Street, that “we are not going to be the only bad dog on the street,” according to an account that Mr. Dacre gave to his management team. Mr. Murdoch’s spokesman did not respond to questions about his private conversations.

Former company executives and political aides assert that executives at News International, the News Corporation’s British subsidiary, carried out a campaign of selective leaks implicating previous management and the police. Company officials deny that. The Metropolitan Police responded with a statement alleging a “deliberate campaign to undermine the investigation into the alleged payments by corrupt journalists to corrupt police officers.”

Photo

Rupert Murdoch, center, with his son James, left, in London last week. They face questioning in Parliament on Tuesday over the hacking scandal.Credit
Olivia Harris/Reuters

Mr. Murdoch was attending a conference in Sun Valley, Idaho, early this month when it became clear that the latest eruption of the hacking scandal was not, as he first thought, a passing problem. According to a person briefed on the conversation, he proposed to one senior executive that he “fly commercial to London,” so he might be seen as a man of the people. He was told that would hardly do the trick, and he arrived on a Gulfstream G550 private jet.

Evidence Was There All Along

The storm Mr. Murdoch flew into had been brewing since 2006, when the tabloid’s royalty reporter and a private investigator were prosecuted for hacking into the messages of the royal household staff in search of juicy news exclusives. For years afterward, company executives publicly insisted that the hacking was limited to that one “rogue reporter.”

Andy Coulson resigned as editor of The News of the World after the prosecution, but said he knew nothing. “If you’re talking about illegal tapping by a private investigator,” Rupert Murdoch declared in February 2007, “that is not part of our culture anywhere in the world, least of all in Britain.”

But it turns out that almost from the beginning, executives of News International, the British subsidiary that owns the tabloid, had access to information indicating that other reporters were also engaged in the practice.

During the royal hacking case, Scotland Yard had seized thousands of pages of records with the names of thousands of possible hacking targets from the home of the private investigator, Glenn Mulcaire, who worked for the tabloid. While the police largely limited their investigation to the royalty case, lawyers representing people believed to be victims of hacking fought for access to Mr. Mulcaire’s records and made them available to the tabloid executives during the litigation.

In the initial cases, News International saw documents naming other journalists, according to details of those cases obtained by The New York Times. Notes in Mr. Mulcaire’s files include the names “Ian” and “Neville,” apparent references to the news editor, Ian Edmondson, and the chief reporter, Neville Thurlbeck.

James Murdoch, who oversees Europe and Asia operations for the News Corporation, signed off on a £700,000 settlement with Gordon Taylor, a soccer union boss who was the first to sue. One condition of the payment was confidentiality.

This month, James Murdoch acknowledged he was wrong to settle the suit, saying he did not “have a complete picture of the case” at the time.

Ms. Brooks personally persuaded Max Clifford, a celebrity publicist, to drop his case in return for even more compensation, Mr. Clifford said. He was paid to provide story tips to the paper — a deal he said totaled £1 million.

Beyond Mr. Mulcaire’s files, another likely source of information about hacking by The News of the World is its internal e-mails.

Even as the company faced a flood of claims over the past several years, News International has acknowledged that it did not take any steps to preserve e-mails that might contain evidence of hacking until late last fall. When The News of the World moved offices late last year, the computer used by Mr. Edmondson was destroyed in what the company describes as a standard procedure.

The company asserted in court that a vast amount of its e-mails from 2005 and 2006 — believed to be the height of the hacking activity — had been lost. Company officials blamed bungling, not conspiracy, for the erasures.

Photo

John Whittingdale, chairman of the committee that will question the Murdochs, said they need to come clean on the scandal's extent.Credit
Jeff Overs/BBC, via Getty Images

News International has subsequently acknowledged that some messages might be recoverable on backup disks, and the police are trying to recover that information now, said Tom Watson, a Labour Party member of Parliament. Last year, a forensic computer specialist that the company hired to help it comply with a court order to turn over documents made a surprising discovery: three e-mails sent to Mr. Edmondson containing PIN codes that could allow access to voice mail, as well as names and telephone numbers, one official said.

The paper fired Mr. Edmonson and turned over the e-mails to the police. Those e-mails were a factor in the decision to open a new Scotland Yard inquiry into hacking, according to the inquiry’s leader, Sue Akers. Mr. Edmondson referred questions to his lawyer, who did not respond.

In April, the police arrested Mr. Edmondson, along with Mr. Thurlbeck. A few days later, News International issued a blanket apology, saying, “It is now apparent that our previous inquiries failed to uncover important evidence.”

News International has for years said a 2007 internal investigation showed that hacking was not widespread, but recent interviews with company officials indicate that the inquiry had a different purpose. It was aimed at defending the company from a lawsuit filed by Clive Goodman, the paper’s royalty reporter who had been fired for hacking. He claimed that the dismissal was unfair because others were hacking as well, according to two company officials with direct knowledge.

Colin Myler, who succeeded Mr. Coulson as editor of The News of the World, told Parliament in 2007 that News International had turned over as many as 2,500 e-mails to the law firm of Harbottle & Lewis, which the company had retained in the matter. In a letter to Parliament at the time, the firm said it did not find anything in the e-mails linking hacking to three top editors — Mr. Coulson, Neil Wallis and Mr. Edmondson.

But a company official speaking on the condition of anonymity said that the 2,500 e-mails given to the law firm related only to Mr. Goodman and represented only a small portion of the company’s e-mail traffic.

Since Scotland Yard began its new investigation in January, with access to more internal documents, all three of the editors, who are no longer at the paper, have been arrested.

Two company officials said the 2007 internal inquiry was in fact overseen by Les Hinton, then executive chairman of News International and who resigned Friday as chief executive of Dow Jones. Mr. Hinton told Parliament in 2007 that Mr. Myler “went through thousands of e-mails.” But Mr. Myler was not given direct access to the e-mails, the company officials said. Mr. Hinton did not respond to a message, but in a statement announcing his resignation, he said he “was ignorant of what apparently happened.”

While the e-mails reviewed for the internal inquiry in 2007 showed no direct evidence of hacking, according to three company officials they did contain suggestions that Mr. Coulson may have authorized payments to the police for information. Yet News International turned over those documents to the police in recent months, prompting yet another investigation, this one into possible police bribery.

It is not clear who at News International saw the e-mails in question, or whether the law firm flagged them. The firm, citing client confidentiality obligations, declined to comment, as did the News Corporation.

After Mr. Edmondson was fired and arrested, Ms. Brooks pressed to pay him a monthly stipend, according to a person with knowledge of the transaction. After an internal disagreement, the payments were moved from the newsroom budget to News International’s. The company put other journalists on paid leave after their arrests, reasoning that they were innocent until proved guilty, a company spokesperson said.

Video

TimesCast | July 18, 2011

The phone-hacking scandal in Britain takes down another top police official; and a British parliamentary committee anticipates the testimony of Rupert Murdoch, James Murdoch and Rebekah Brooks.

By the middle of last year, News International’s lawyers and some executives were urging that the company accept some responsibility, said two officials with direct knowledge. Ms. Brooks disagreed, according to three people who described the internal debate. “Her behavior all along has been resist, resist, resist,” said one company official.

Effort to Spread the Blame

Over the last several months, Ms. Brooks spearheaded a strategy that seemed designed to spread the blame across Fleet Street, interviews show. Several former News of the World journalists said that she asked them to dig up evidence of hacking. One said in an interview that Ms. Brooks’s target was not her own newspapers, but her rivals.

Mr. Dacre, the editor of The Daily Mail, told his senior managers that he had received several reports from businesspeople, soccer stars and public relations agencies that two News International executives, Will Lewis and Simon Greenberg, had encouraged them to investigate whether their phones had been hacked by Daily Mail newspapers.

“They thought it was unfair that all the focus was on The News of the World,” said one News International official with knowledge of the effort. The two men have told colleagues they did not make such calls, but two company officials disputed that.

Mr. Dacre confronted Ms. Brooks over breakfast at the plush Brown’s hotel. “You are trying to tear down the entire industry,” Mr. Dacre told her, according to an account he relayed to his management team.

Ms. Brooks, known for her tenacity, was not deterred. At a dinner party, Lady Rothermere, the wife of the billionaire owner of The Daily Mail, overheard Ms. Brooks saying that The Mail was just as culpable as The News of the World. “We didn’t break the law,” Lady Rothermere said, according to two sources with knowledge of the exchange. Ms. Brooks asked who Lady Rothermere thought she was, “Mother Teresa?”

The scandal that smoldered for years ignited this month with news reports that the tabloid had hacked into the messages of Milly Dowler, a missing 13-year-old girl who was subsequently discovered murdered. Ms. Brooks, who was News of the World’s editor during the Dowler hacking, issued an apology, saying that she would be appalled “if the accusations are true.”

In the last two weeks, a series of leaks landed in other British news media that appeared intended to shift blame from News International’s current leadership and onto Mr. Coulson and the Metropolitan Police. According to political aides and News Corporation executives, the leaks most likely came from within the company.

Leaks to The Sunday Times, the BBC, and outlets like Mr. Greenberg’s former employer, The London Evening Standard, gave details of Mr. Coulson’s alleged payments to the police and blamed previous News International management.

Mr. Greenberg did not respond directly to messages seeking comment. But a News International spokeswoman referred reporters to a statement from Ms. Akers, the head of the police investigation, praising him and Mr. Lewis for their cooperation with the police.

The Metropolitan Police said it was “extremely concerned” that the release of selected information “known by a small number of people” present at meetings between News International and the police “could have a significant impact on the corruption investigation.”

Late last week, Rupert Murdoch told The Wall Street Journal that the News Corporation had handled the situation “extremely well in every way possible,” except for a few “minor mistakes.”

This weekend, as Mr. Murdoch was coached to face Parliament on Tuesday by a team of lawyers and public relations experts, a full-page advertisement from the News Corporation appeared in every major British newspaper. “We are sorry,” it said.

Don Van Natta Jr. contributed reporting.

A version of this article appears in print on July 19, 2011, on page A1 of the New York edition with the headline: Murdoch Aides Long Obscured Scandal’s Scale. Order Reprints|Today's Paper|Subscribe